September 6, 2012
What a topsy-turvy day for the pound! GBP/USD got an extra dose of volatility yesterday as it dipped to a low of 1.5826 then jumped to a high of 1.5935 before closing at 1.5901. What the heck happened during yesterday's trading sessions?
Do you know what's the most surprising part about yesterday's strong cable rally? It's the fact that the U.K. didn't release any economic reports at all! Apart from the improvement in risk sentiment, traders' positioning ahead of the BOE monetary policy statement was probably another reason that boosted the pound against its major counterparts.
The Bank of England is set to make its monetary policy announcement at 11:00 am GMT today and they are expected to keep rates unchanged at 0.50% and make no additional asset purchases. Note that the recently held London Olympics games had a positive impact on spending and economic growth last month, which suggests that BOE Governor King and his men might be a little more upbeat with their assessment.
"The only cable I watch is the pound baby."